Two leading advisors to major law firms predicted a declining demand for legal services, a 15% drop in net income from 2008, the inability to raise rates, additional layoffs, salary freezes and cost cutting, heavier fee discounting, expenses rising faster than revenues -- and a long wait for better times.

"This is the time to get rid of the billable hour," said Evan R. Chesler, presiding partner at Cravath, Swaine & Moore in New York, one of a number of large firms whose most senior lawyers bill more than $800 an hour.

"Clients are concerned about the budgets, more so than perhaps a year or two ago," he added, with a lawyer's gift for understatement.

2009 will be an extraordinarily bleak year because of one key factor, according to Jones: "The single factor that worked consistently to drive profitability in the past was the ability to drive up rates 6% to 8% per year, regardless of what else was happening. As we are entering a period of extended softness in demand, corporate clients are going to be more resistant to the overall cost of legal services. You are looking at a fundamental shift in the law firm economic model we've lived with for many years.

The big firms themselves have mostly been tight-lipped about their billing structures, with even Chesler himself denying the Times any details on Cravath's rates. But more importantly, there's scant evidence that a billing revolution can stem the tide of law firm layoffs, at least not until the economy begins to rebound. At that point, perhaps new fee structures can help law firms learn how to staff up at a sustainable level. Wall Street might have gotten drunk, as former President Bush explained the economic crisis last year, but will its law firms sober up when they hit rock bottom?

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Two leading advisors to major law firms predicted a declining demand for legal services, a 15% drop in net income from 2008, the inability to raise rates, additional layoffs, salary freezes and cost cutting, heavier fee discounting, expenses rising faster than revenues -- and a long wait for better times.

"This is the time to get rid of the billable hour," said Evan R. Chesler, presiding partner at Cravath, Swaine & Moore in New York, one of a number of large firms whose most senior lawyers bill more than $800 an hour.

"Clients are concerned about the budgets, more so than perhaps a year or two ago," he added, with a lawyer's gift for understatement.

2009 will be an extraordinarily bleak year because of one key factor, according to Jones: "The single factor that worked consistently to drive profitability in the past was the ability to drive up rates 6% to 8% per year, regardless of what else was happening. As we are entering a period of extended softness in demand, corporate clients are going to be more resistant to the overall cost of legal services. You are looking at a fundamental shift in the law firm economic model we've lived with for many years.

The big firms themselves have mostly been tight-lipped about their billing structures, with even Chesler himself denying the Times any details on Cravath's rates. But more importantly, there's scant evidence that a billing revolution can stem the tide of law firm layoffs, at least not until the economy begins to rebound. At that point, perhaps new fee structures can help law firms learn how to staff up at a sustainable level. Wall Street might have gotten drunk, as former President Bush explained the economic crisis last year, but will its law firms sober up when they hit rock bottom?